India has been experiencing a V-shaped recovery since June when the gradual easing of lockdown restrictions was initiated and the sustained improvement in high frequency indicators ignite optimism of an improved performance in the second half of the year, the government's monthly economic report said.
"The impending vaccination is set to spur the momentum in economic activity globally," the report said.
According to the report, the management of the COVID-19 spread has been effective despite the festive season and onset of winter season. "The downside risk, however, remains the spread of the UK variant and fatigue from social distancing guidelines."
The report said that the effective management of COVID-19, spread despite the festive season and onset of winter season, sustained improvement in high frequency indicators and V-shaped recovery, and easing of lockdown restrictions distinguish Indian economy as the one riding against the COVID-19-wave.
The agricultural sector remains the bright spot of Indian economy, with healthy year-on-year growth of 2.9 percent in Rabi sowing, accelerating tractor sales, and reservoirs’ live storage at 122 percent of decadal average, the report said.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
"This, along with rise in minimum support prices accompanied by record procurement, and accelerated wage employment generation through MGNREGS, bodes well for rural incomes and bears testimony to the success of PMGKY (Pradhan Mantri Garib Kalyan Yojana) in alleviating rural distress," the report said.
According to the report, this rise in rural incomes is mirrored in the healthy, though moderated, sales in passenger vehicles, two and three wheelers and tractors, and a rebound in vehicle registrations for the first time after March 2020.
Sustained spurt in commercial and industrial activity was further corroborated by continued growth in PMI manufacturing, power demand, persistent improvement in E-way bills generated and highway toll collection rising above pre-COVID-19 levels, the report said.
"Monthly GST collections attained their record levels in December. The growth momentum in rail freight traffic remains upbeat, as passenger earnings begin to recover, port cargo traffic grows YoY, and domestic aviation picks up further," according to the report.
It also said that the digital payment upsurge too continues unabatedly, powered by resumption of economic activity, financial inclusion through Aadhar enabled payment systems, and behavioral shift to digital payments.
The report said that central government’s support to state governments to enable economic recovery can be seen in the sustained fiscal support despite decline in revenues, special window to borrow for states’ GST shortfall, and additional borrowing limits for adopting state-level reforms.The Centre’s fiscal deficit stood at 135.1 percent of BE (Budget Estimate) from April to November. As on 25th December 2020, the central government gross market borrowing during FY2020-21 reached Rs 10.27 lakh crore (compared to state governments’ Rs 5.37 lakh crore), witnessing a 66.2 percent y-o-y growth (compared to state governments’42.1 percent).